WalMart/Sam’s Club – Urban Renewal and Council

I mentioned in an earlier post that to discuss the Ensor property (site of possible new Walmart and Sam’s Club) without discussing urban renewal is discussing only half of the story.  And, to discuss the subject with any certainty prior to the outcome of the legal dispute is just speculating.

So, the story is…………..

In 2014 the city council approved an urban renewal plan for the Santa Fe Corridor.  (One of four plans approved – rushed to be approved before 300 passed in order to circumvent the voters.)  The Ensor property is included in this plan area.  Once the plan is approved the development of the area becomes the responsibility of the urban renewal authority, LIFT.  An urban renewal plan is required, by law, to contain a project and the boundaries are to be narrowly drawn.  The Santa Fe plan does not contain a project nor were the boundaries narrowly drawn.  (In spite of citizens pointing out the deficiencies of the plan the council majority approved all four plans.)  An urban renewal authority is also required to submit an impact report to the County which was done.  It was the basis of the impact report that the County challenged all four urban renewal plans but I will only discuss the Santa Fe plan at this time.

So here are some facts about this particular property that were not discussed at the information meeting on Jan. 7th.

Agricultural Land Issue – The Ensor property and the property that Breckenridge Brewery sits on are zoned agricultural for property tax assessment purposes.  The UR law was amended in 2010 to make it virtually impossible to include ag land in an urban renewal area.  The County is the body that can legally challenge LIFT on the inclusion and they have done so.  If the County wins the suit the Ensor property and the property where the brewery is located will be excluded permanently from the Santa Fe urban renewal area and will not be subject to tax increment financing (TIF) and the LIFT board will not be able to direct the development.  If the City wins the suit the property will remain in the Santa Fe urban renewal area and will be subject to TIF.  The plan was written by LIFT and includes the use of property and sales tax increment to fund urban renewal.  The plan was approved by LIFT, the planning board and city council.  The TIF “clock” has begun and increment has been created and tax dollars intended for the schools, parks, city, county and urban drainage are being diverted to the special fund for LIFT.  (TIF report is available on the County’s website and I have included a graph of how much each taxing entity is being diverted to the special fund on this Blog.)

Zoning – The plan did not have to be approved.  In fact, the urban renewal law allows LIFT to rezone the property without the consent of the property owner.  If the council truly did not approve of the current zoning of the property they had a way to make it change but the did not.  Instead, they approved a plan with the 1985 zoning in place.  (C.R.S. 31-25-105 Powers of the Authority – d) to arrange with the municipality or other public body to plan, replan, zone, or rezone any part of the area of the municipality or of such other public body, as the case may be, in connection with any project proposed or being undertaken by the authority.)

Pro Forma – the urban renewal law allows LIFT to sell bonds to fund development.  The consultant explained to LIFT that they would receive a pro forma report from a developer that would show how much public money, beyond their own funds, were needed to build the project.  LIFT’s role is to review the pro forma info and determine the level of the bonds required to finance the project.  The bonds will be paid for by collecting tax increment financing (TIF).  Michael Penny stated in the Jan. 7th meeting that the council would serve in this role….that is not what the authority has been told and it is not what they understand to be the process.  LIFT is the body that determines if bonds will be issued and the value of the bonds.  (C.R.S. 31-25-105 Powers of an authority.  (b) to undertake urban renewal projects and to make and execute any and all contracts and other instruments which it may deem necessary or convenient to the exercise of its powers under the part 1, including but not limited to, contracts for advances, loans, grants, and contributions from the federal government or any other source;)  LIFT is authorized to sell bonds and does not need further approval from council to do so.

City Council has a limited role in urban renewal.  They can establish the authority, they approve the appointment of members, they can remove a member, they can abolish the authority by a simple majority vote of council, and they approve the urban renewal plans and any substantial modifications of the plans.  Once they have approved the plans the authority has “police powers” to enact the law.  (C.R.S. 31-25-102(3) the general assembly further finds and declares that the powers conferred by this part 1 are for public used and purposes for which public money may be expended and the police power exercised and that the necessity in the public interest for the provisions enacted in the part 1 is declared as a matter of legislative determination.)

Urban renewal authority’s are not advisory to council.  They are independent and considered a “body corporate and politic.”  In some communities the council will serve as the authority but that is not the case in Littleton.  We have 7 unelected individuals that make up the authority and they have the authority to implement the plans that the council has approved.  They are not accountable to the citizens of Littleton.  We can’t vote them out of office.

Unfortunately, our city council, in my opinion, approved urban renewal plans without understanding what they were doing.  The city manager did not understand that the TIF clock started the day the plans were approved.  It wasn’t until April that he and I argued over the collection of TIF that he finally realized that he was wrong.  At that point he said he would have to go and talk to the taxing entities because “they” never intended to collect any TIF until there was a project.  But anyone can check the County’s website and look at the mill levy certification report and see how much increment is being diverted from the schools, parks, city, county and urban drainage.  Yes, increment has accumulated and the urban renewal authority does not have a single project.  The increment is all due to property owners improving their properties with their own resources but urban renewal will reap the benefit.

When Penny tries to reassure the community that the council will be in control of urban renewal projects the law does not back him up.  The power and authority, once the plans are approved, lie with the authority and not council.  It may be what he wishes and I believe he has conveyed the same to the council and they believe him.  But, attending the LIFT meetings will uncover how far apart the two bodies are in their understanding of each other’s role in urban renewal.

What does this mean?  If the city prevails in court the Ensor property will remain in the urban renewal area.  Property and sales taxes are TIFed for the next 25 years and development can be funded by property taxes diverted from the schools, city, county, park district and urban drainage.  It will be up to the urban renewal authority to make the decisions about development of the property.  All sales taxes from the development are subject to division to the authority for the next 25 years.  (Look back period, to determine the base for TIF, is the previous 12 months prior to the approval of the plan.  That would be a big zero since the land is vacant.)

If the county prevails the Ensor property (and the Breckenridge property) will be excluded from the urban renewal plan eliminating the possibility of our tax dollars being diverted to finance any project(s) on the Ensor land with the use of tax increment financing.  However, the developers could use a Metro District to fund their own project so it could still be built but not using our money.





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